The packaging of DNA into chromatin plays an important role in the fidelity of DNA-related processes. The position of nucleosomes, covalent histone modifications, and the integrity of individual histone proteins all contribute to the accessibility and function of DNA. Histones and their modifications influence the expression of genes both positively and negatively and act at the initiation, elongation, and termination stages of transcription. One such modification, methylation of lysine 36 on histone H3 (H3K36), catalyzed by the Set2 histone methyltransferase (KMT3), is associated with the elongation phase of transcription and is found within the coding regions of actively transcribed genes (19, 24, 25, 39, 41, 42, 46). Set2 catalyzes all three states of methylation at H3K36, monomethyl (me1), dimethyl (me2), and trimethyl (me3), and negatively influences gene expression (20), including the repression of cryptic promoters within the coding region of genes such as STE11 (5, 11, 23). Repression is proposed to result from recruitment of the Rpd3S histone deacetylase complex to specific modifications on the chromatin, including an interaction between methylated H3K36 and the chromodomain of Eaf3, leading to deacetylation and stabilization of newly transcribed chromatin, particularly on poorly expressed genes (5, 11, 15, 22, 23). The presence of H3K36me2 correlates with whether a gene is expressed or not (39), while H3K36me3 tends to correlate with highly expressed genes (38), supporting distinct functions for the two modifications. Analysis of the C-terminal SRI domain of Set2 indicates that it interacts with the phosphorylated carboxy-terminal domain (CTD) of Rbp1(26, 45), the largest subunit of RNA polymerase II (RNAPII), and is required for normal levels of H3K36me (16). This interaction supports cotranscriptional deposition of methyl groups on H3K36 during transcription elongation. Further support for H3K36 methylation being a cotranscriptional modification comes from observations that Ctk1, a subunit of a cyclin-dependent kinase complex (CTD-K) that acts on the CTD of Rbp1 within RNAPII (6, 21, 36, 46), and Spt6, a transcription elongation factor (4, 9, 10, 14), are required for H3K36 methylation (8, 15, 19, 47) and for repression of the cryptic promoters at STE11 (5). Spt6 is an essential protein that binds to histone H3 and is capable of nucleosome assembly in vitro (4). Spt6 is known to control the initiation (1), elongation (10, 13, 14, 18, 27), and termination (12) phases of transcription, including cotranscriptional pre-mRNA processing and export (48). The protein has several domains, including an EF hand, a resolvase domain, a helix-hairpin-helix DNA binding domain, and an SH2 domain. The SH2 domain of mammalian Spt6 binds to the CTD on RNAPII when phosphorylated at Ser2 (48). In Saccharomyces cerevisiae, the requirement for Spt6 in maintaining H3K36 methylation is allele specific (8). Strains expressing the spt6-140 allele show normal levels of H3K36 methylation, while those expressing the spt6-1004 allele show defects in H3K36 dimethylation and trimethylation. At present it is not known if the different methylation states at H3K36 are associated with different functions, although there are functions associated with Set2 that are likely to be independent of the Rpd3S complex and cotranscriptional histone deacetylation (3, 43, 44). Moreover, it is not known if Set2 KMTase activity is regulated in any way. Here we show that the region of Set2 (1-261) containing the SET domain is sufficient for H3K36me2, histone deacetylation, and repression of cryptic promoters at STE11 but not for H3K36me3. Moreover, Set2-catalyzed H3K36me2 is largely independent of Ctk1-dependent CTD phosphorylation and the SRI domain of Set2, consistent with the observations that H3K36me2 correlates with whether a gene is “on” or “off,” but not the level of activity of a gene (39). By contrast, H3K36me3 requires the integrity of H3P38, Spt6, the CTD of RNAPII, Ctk1, and the SRI domain of Set2. These data indicate that the different methylation states created by the Set2 KMTase are likely to be regulated and are functionally distinct.